UFC-Que Choisir’s campaigns on « Small Insurances »

November 15th 2013

A growing number of small insurances in France

• A recent proliferation of small insurances :– On goods : smartphones, computers, bikes, washing machine…– On services : bank cards, flight and train cancelation, travel cancellation, water

supplies…– But also : cats and dogs, wedding (!), etc.

• A lot of people already equipped : – A 3 billion euros market at least, fastly growing– Poll from the recent “French federation of small insurances” :

– 81% of French consumers declare having at least 1 small insurance– 2,4 small insurance per French consumers

…and it’s only a declarative poll, whereas one of the main characteristic of these insurance is to be missold (i.e without transparency)

• Two main characteristics…: – Sold by non-professional insurers (ex : in phone stores, in supermarket)– Accessory of a good or a service : the consumer don’t come to buy the

insurance, but the good or the service

2

A lot of complaints from consumers

3

• During the “sell” : – Sells without the consumer’s consent : for example, bundled with the good – Sells without verification of the use for the consumer– An idealized presentation : if you listen to the seller, no exclusion in the contract!– The contract is only available after signature…no way to verify the assertions

• When using the insurance : Very large exclusions with a huge possibility of interpretation by the insurance

manager. Ex : (Phone) for “pickpocketing” you have to be aware of the theft “immediately” to be reimbursed.

Requalification by the insurance manager to “fit” in the exclusions « Low cost » repairing services

• When the consumer tries to terminate the insurance : In France, two legal rules : one protecting the consumer, one not… …guess which of the two is chosen by these insurances?

A growing sector + a lot of complaints = an action from UFC-Que Choisir!A growing sector + a lot of complaints = an action from UFC-Que Choisir!

An action in two times

4

• Due to the very large scope of “small insurances”, we concentrated on the “archetypicals” insurances, in two times :

– December 2012 : phone insurances• One of the most important small insurance (≈ 500 M€), thousands of

complaints• Christmas : 2 millions phones sold

– June 2013 : cards and water supplies insurances• Cards : an insurance bundled in bank packages, owned by the majority of

French consumers• Water supplies : sold at a distance, without any verification by the

professional of the use for the consumer• June 2013 : beginning of the discussions on Consumer Protection law in the

French Parliament

Impose the issue during the discussions

What we discovered : phone insurances (1/2)

5

• Contracts study : a lot of exclusions that make the consumer protected…

….Only in cases that nearly never exist (25% of real accidents are well-covered) !

Comparison with the statistics : ex for theft

...Only in cases that nearly never exist in facts •25% of real accidents are well-covered !

What we discovered : phone insurances (2/2)

• An organisation of the market that facilitate complains – Attenuation of responsabilities between :

• Retailer : only sells the product he orderd to insurance

company, so can promise « miracles »

• Manager : the consumer contact when a problem

arrives, not tyed by what the seller said. Its aim is to

avoid « too much » indemnisation.

• Insurance : creates the product, and pays when

manager says

• A 80% margin for professionals!– Estimation based on accidents statistics,

datas from professional press, etc.• Consumers : 18% of pay-back

• Retailer : between 20% and 50% of the premium

(hold the market)

• Manager : between 10 and 30% of the premium

• Insurance : only 10 to 15%

What we discovered : insurances for fraud by card

• An insurance massively sold : – Aim of the insurance : protect against fraud on payments– Sold by banks via packages, that equip at least 55% of French consumers

• Poor presentation of the package + of the insurance by bank employees

• An interest that disappeared : – Since 2009, PSD : bank must cover

all remote fraud, which is the huge majority of frauds in France

– + Filings of complaints to the Police decrease (and no covering whithout complaining)

– But not change in the practices, and no change in the prices!

• At least, a 94% margin! : – 2007 : leak in the press of the results of Crédit

Agricole on this insurance…– …and this huge margin was before the PSD!

What we discovered : water leaks insurance

• Insurance covering leaks « between water meter and house walls »- Useless for tenants (covered by the owner insurance), and flats owners

(covered by their house insurance or co-ownership insurance)- Usefull for Less than 46% of French consumers :

owners of houses with water meter in the garden

• Massive mailing campaings, without any targeting- The 1st retailer declares sending 40 millions mail/year…

• A confusion between water bills and insurance- Retailers (independant firms) use water suppliers logo + clients file

+ Use of ambiguous terms  : f.e, « To be paid before march 21st»

• As for card insurance, a recent law limiting consumer’s responsability for waters leaks…

• …And one more time, a very profitable insurance for retailers : - Only 16% paid back to consumers!

A successful campaign

9

• In media : an easy topic that interests journalists in search of “scandals” (cf. margins) and ways for consumers to save money- + No contesting of our figures by the professionals of the sector

• With members of Parliament : the “mother-was-victim effect”–Many MP’s know relatives victims of this type of insurance

No need to convince them of the necessity to regulate this sector

• Integration in the draft law on Consumer Protection- Creation of a cooling-off period (with conditions that we want to

suppress)- Facilitation of terminating the contract (whenever you want after

1 year in the contract)

• Also professionals’ reaction - Insurers’ syndicate, insurance mediator now want to “clean” the sector